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TMI Tax Updates - e-Newsletter
June 21, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Service of SCN - while attaching the bank locker, no SCN served on the petitioner to offer his explanation - the petitioner has issued fake GST invoices without supply of goods to different business firms/companies by passing on a huge fraudulent input tax credit in respect of 21 firms, out of more than 70 firms created by him and thus caused huge loss to the Government exchequer. The investigation is stated to be pending. - petitioner directed to approach Special Judge for Economic Offences-cum-IV Additional Metropolitan Sessions Judge for appropriate relief - petition disposed off. - HC
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Maintainability of appeal - time limitation - This is a case of substantial compliance and the interests of justice ought not to be constrained by a hyper technical view of the requirement that a certified copy of the order appealed against should be submitted within one week of the filing of the appeal. - The impugned order of the Appellate Authority rejecting the appeal on the ground of delay, is hereby set aside - HC
Income Tax
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Reopening of assessment u/s 147 - In the instant case, the A. O. has disposed of the objections of the petitioner by passing a speaking order considering all legal and factual aspects, which are just and proper, and do not call for any interference by this Court, exercising the jurisdiction under Article 226 of the Constitution of India. - HC
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Exemption u/s 11 - DIT(E) cancelled the registration u/s 12AA of the Act on the ground that the assessee violated the provision of section 13(3) of the Act for taking loan and donating the same to the sister concern without carrying out any charitable activity - - Undisputedly, the words as obtained registration at any time was inserted in section 12AA(3) of the Act w.e.f 01.06.2010. DIT(E) has cancelled the registration since inception - as contended by assessee that the cancellation could not have been made prior to the insertion of the provision thus, the DIT(E) clearly exceeded the jurisdiction. - AT
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Bad Debts - Investments written-off - Nevertheless, no new manufacturing unit would have come into existence and no new asset was proposed to be acquired by the assessee. The advances were given in the normal course of business out of commercial expediency which would have improved the profit-making apparatus without disturbing the capital setup of the assessee. There is no dispute that the said advances became irrecoverable and accordingly, the same were written-off in the books of accounts. - Thus advances lost during the course of business would be business losses and hence, an allowable deduction - AT
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Penalty u/s 271AAB/271(1)(c) - cash was seized u/s 132A - the discrepancies were found during the survey - Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. - AT
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Denial of exchange loss - Unexpalined loss from the income - provisions of section 43A applicability - AS-11 is mandatory and required to be followed in computing the income - it cannot be held that neither depreciation on enhanced cost due to exchange fluctuation is to be allowed nor the loss itself was to be allowed more so because claim to this effect was raised both before the Assessing Officer as well as the CIT(A). - AT
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TDS u/s 195 - Disallowance u/s 40(a)(i) - the said income in the hands of non-resident has to be considered in the light of the provisions of DTAA between India and the Country of the nonresident, i.e UAE. In the absence of Permanent Establishment of the nonresident in India during the financial year relevant to impugned assessment year and any income attributable to such Permanent Establishment, such business income is not chargeable to tax in India. - When the amount paid by the assessee is not chargeable to tax in India then the assessee is not liable to deduct TDS u/s 195 - AT
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Revision u/s 263 - nature of expenditure - There is no averment in the reply of the assessee that the amount of share application money was received for ‘brand building’ of the assessee company. Again turning to the core issue that the share application money in nothing but a ‘capital receipt’ and its return will not change its character. Even otherwise the assessee has not incurred any other amount except the exchange rate difference, which in our considered view is nothing but a ‘capital expenses’. - order passed by AO is not sustainable in law and hence not only erroneous but in so far as prejudicial to the interest of the Revenue. - AT
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Revision u/s 263 - non application of mind by AO on search figures of income - PCIT has not brought any material to justify the alleged income of ₹ 210 crores. Thus, we note that allegation made by the ld PCIT is based merely on suspicion and conjecture. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the assessing officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. - AT
Customs
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Rejection of claim for Preferential Duty - Areca nuts - certificate of origin (COO) - The certificate of origin in this case as well as the clarification obtained by the petitioner have been obtained from the Assistant Director acting for the Director General of Commerce in the Department of Commerce, Colombo. The designated Authority under the IFSTA is the Director General of Commerce, Department of Commerce, also the authority which has issued the COO and subsequent clarification. The objection of the respondents in regard to the COO as well as their contention that the clarification dated 19.03.2021 ought to have been received ‘through proper channel’ is thus, hypertechnical, to say the least. - HC
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Jurisdiction - proper officer for issuance of SCN - DRI is proper officer or not - the show cause notice was issued by the Additional Director General, DRI under Section 28 ibid, which as per the aforesaid decision of the Hon’ble Supreme Court is without any authority of law and therefore the Appeals also deserve to be allowed on this ground itself. - AT
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Classification of imported goods - Pottassium Humate - there are no justification for issuing the order by the Assistant Commissioner after the expiry of more than one month when there is a live consignment involved in this case. - The impugned items is not included in the Schedule under the Insecticide Act, 1968 and hence it is not required registration - AT
IBC
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Maintainability of application - initiation of CIRP - Whether the MOU dated 20 May 2016 is valid or not is a disputed question and needs further investigation. Such disputed question cannot be decided under the summary jurisdiction exercised by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. There is no debtor-creditor relationship between the Operational Creditor 'SPJV' and the Corporate Debtor 'GIPL'. Therefore, the Petition filed U/S Sec 9 is not maintainable. - AT
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Condonation of delay in filing the claim before the RP - the Applicant has failed to establish the reason for the delay in submission of the claim. This led us to the questions that why not the Respondent/RP take cognizance of outstanding statutory dues as per book of accounts of the Corporate Debtor. The Respondent has clearly stated that the alleged dues are not yet quantified and litigations under various authorities are pending - The Respondent has also stated that the Resolution Plan is pending for approval before CoC. Hence, we are of the view that there is no merit in this application. - Tri
Service Tax
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Benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner had not filed returns during the relevant period - The stand of the Department is in fact beneficial to the appellant especially since the Department had the option of treating the petitioner's declarations as 'never made', and thereby denying it the benefits under the scheme and initiating proceedings for recovery of the tax amount, together with penalty and interest in accordance with the statutory provisions. - HC
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Benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refusal to accept the manual returns filed - The requirement of electronic filing is further evidenced by the provisions of the SVLDR Scheme, wherein also, it is specified that the declaration under Section 125 of the Act must be filed electronically. Thus, with the advent of information technology and its advancement, the shift from manual filing to electronic filing serves a salutary purpose and this Court cannot in exercise of its jurisdiction under Article 226 of the Constitution of India interfere with such seamless administration under the taxing statutes - HC
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CENVAT Credit - input services - the scheme of the Act read with the Rules has to be read harmoniously. If for something missing in the rules, the cenvat credit is available under the scheme of the Act, read with Rule 3 read with Rule 2(l) and (k) of the Cenvat Credit Rules, service tax credit cannot be denied for some gap left in the statute. - AT
VAT
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Requirement to comply with the pre-deposit of 12.5 per cent of the disputed tax along with the appeal - Here the appeal does not relate to imposing of tax for the relevant tax period or towards any tax liability or penalty imposed, but for a different purpose where no tax is quantified. Therefore, insisting on payment of 12.5 per cent. of difference of tax may not be proper. - HC
Case Laws:
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GST
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2021 (6) TMI 644
Permission for withdrawal of application - Exemption under Serial No. 66 of N/N. 12/2017-Central Tax (Rate) dated 28th June 2017 - Indian Institute of Technology Madras - educational Institution or not - rate of tax on services provided to Indian Institute of Technology Madras - nil rate applicable as per Serial no 3 of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 or otherwise? - HELD THAT:- In the case at hand, the applicant vide their application has stated that they provide security service to IIT Madras and when the documents related to the supply for which ruling is sought was called for, the applicant has stated that by mistake they had mentioned that the services are provided to IIT Madras in the application, while the services are being provided to IIITDM, Kancheepuram - the applicant had made elaborate submissions as to the constitution of IIT Madras in their application and their interpretation as to how the exempting entries as per Notification No. 12/2017 ibid is not applicable to IIT Madras. The applicant was informed the above statutory provisions during the hearing held on 09.04.2021 and they stated that they would withdraw the application filed by them in the instant case. Application is allowed to be withdrawn.
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2021 (6) TMI 640
Attachment of Bank Accounts - lockers were opened - petitioner's case is that while attaching the bank account of the petitioners, no SCN was served on the petitioner - no opportunity given to submit the explanation - HELD THAT:- Scrutiny of the documents revealed that Vennapusa Venkata Subba Reddy created 70 different fictitious/shell firms in Andhra Pradesh and Telangana for taking GST registrations. The modus operandi of the said Vennapusa Venkata Subba Reddy was that he opened the fictitious firms only on paper to issue fake GST invoices showing supply of iron and steel goods, chemicals, battery scrap, led etc. This fictitious firms generally operated in three levels - there will be no money, bank transactions at the first and second levels. However, bank accounts are opened with Lakshmi Vilas Bank in the name of firms operating at third level showing receipt of sale consideration through banking channels from different business firms/companies in whose name fake GST invoices are issued for passing on ITC. In this process, Vennapusa Venkata Subba Reddy has issued fake GST invoices with a total turnover of ₹ 397,28,11,944/- without supply of goods to different business firms/companies by passing on a total fraudulent input tax credit of ₹ 61,30,33,274/- in respect of 21 firms, out of more than 70 firms created by him and thus caused huge loss to the Government exchequer. The investigation is stated to be pending. Without expressing any opinion on merits of petitioners case, it is considered apt to direct the petitioners to approach Special Judge for Economic Offences-cum-IV Additional Metropolitan Sessions Judge, Visakhapatnam for appropriate relief - petition disposed off.
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2021 (6) TMI 639
Service of SCN - while attaching the bank locker, no SCN served on the petitioner to offer his explanation - HELD THAT:- Scrutiny of the documents revealed that the petitioner created 70 different fictitious/shell firms in Andhra Pradesh and Telangana for taking GST registrations. The modus operandi of the petitioner was that he opened fictitious firms only on paper to issue fake GST invoices showing supply of iron and steel goods, chemicals, battery scrap, led etc. This fictitious firms generally operated in three levels - there will be no money, bank transactions at the first and second levels. However, bank accounts are opened with Lakshmi Vilas Bank in the name of firms operating at third level showing receipt of sale consideration through banking channels from different business firms/companies in whose name fake GST invoices are issued for passing on ITC. In this process, the petitioner has issued fake GST invoices with a total turnover of ₹ 397,28,11,944/- without supply of goods to different business firms/companies by passing on a total fraudulent input tax credit of ₹ 61,30,33,274/- in respect of 21 firms, out of more than 70 firms created by him and thus caused huge loss to the Government exchequer. The investigation is stated to be pending. Without expressing any opinion on merits of petitioner s case, it is considered apt to direct the petitioner to approach Special Judge for Economic Offences-cum-IV Additional Metropolitan Sessions Judge, Visakhapatnam for appropriate relief - petition disposed off.
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2021 (6) TMI 636
Maintainability of appeal - time limitation - appeal was dismissed on the grounds that the appeal was not presented within the time prescribed under law - appeal was accompanied by the downloaded printed copy of the order appealed and was not accompanied by the certified copy thereof at that stage since the Lawyer who had filed the appeal was in self quarantine - Sufficient cause for delay present or not - HELD THAT:- Considering that the explanation offered by the petitioner is a plausible and not an unreasonable one, especially in these Covid times, and further considering that a downloaded copy thereof was in fact submitted along with the appeal which was otherwise filed within time, this Court is of the view that the mere delay in enclosing a certified copy of order appealed against along with the appeal should not come in the way of the Petitioner s appeal for being considered on merits by the Appellate Authority. This is a case of substantial compliance and the interests of justice ought not to be constrained by a hyper technical view of the requirement that a certified copy of the order appealed against should be submitted within one week of the filing of the appeal. The impugned order dated 10th March, 2021 of the Appellate Authority rejecting the appeal on the ground of delay, is hereby set aside - appeal is now restored to the file of the Additional Commissioner of State Tax (Appeal), Balasore and is directed to be listed there for directions on 5th July, 2021 at 11 am.
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Income Tax
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2021 (6) TMI 642
Deduction u/s 54F - Denial of claim as capital asset transferred was not a long term capital asset in view of Section 2(29A) r.w.s.2(42A) - ITAT allowed deduction - Whether Tribunal erred in treating the asset held by assessee for less than four months as long term capital asset as against stipulation in Sec.2(29A) r.w.s 2(42A) is holding for more than 36 months? - whether Expl.1(b) below sec.2(42A) is applicable and the period of holding of the asset by the previous owner also needs to be considered even though assessee did not receive the asset through gift or will as mentioned in sec.49(i)(ii) but by settlement deed? - HELD THAT:- As decided in The Principal Commissioner of Income Tax, Chennai 34 Vs. Smt.Deepa Vijay [ 2021 (1) TMI 787 - MADRAS HIGH COURT ] wherein had done an elaborate factual exercise, gone through the covenants and conditions contained in the said document dated 19.12.2010 and held that the said document was only a deed of gift because it was voluntary as there was no consideration passed on and the donee accepted the gift unconditionally. The correctness of the factual finding was tested by the Tribunal, which had also gone through the issue in detail, taken note of the decision of the same Tribunal in the case of other owners namely Shri T.T.Siddharth and Smt.Maya Varadarajan [ 2016 (5) TMI 1549 - ITAT CHENNAI ] and dismissed the appeal filed by the Revenue in this regard. On going through the orders passed by both the CIT(A) as well as the Tribunal, we find that the entire issue deeply revolves around the factual matrix, which, in our considered view, has been thoroughly examined by the CIT(A) and the Tribunal and we also find that no question of law much less substantial question of law arises for consideration in this appeal. - Decided against revenue.
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2021 (6) TMI 641
Reopening of assessment u/s 147 - reopening on the basis of the material and the impounded documents recovered during the course of survey action undertaken by the Investigation Wing, Surat under Section 133A - disposing of objections of assessee - HELD THAT:- In case of CIT Vs. M/s.Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT ] it has been held inter alia that the Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is an escapement of income from assessment and that reasons must have a live link with the formation of the belief. Our Court has also in similar case, in the case of Aaspas Multimedia Pvt. Ltd. [ 2017 (6) TMI 557 - GUJARAT HIGH COURT ] held that if on the basis of information supplied by/from the office of Principal Director of Income Tax (Investigation), the A.O., has found that the petitioner assessee was the beneficiary of accommodation entries provided by the other assessee, it could not be said that there was no tangible material available with the A.O., to prima facie form an opinion/belief that income of the petitioner chargeable to tax has escaped an assessment. As rightly submitted by the learned Sr. Standing Counsel Mr.Raval, what is required to reopen a case is reason to believe , the sufficiency or correctness of material cannot be considered at this juncture, as held by the Supreme Court in case of Raymond Woolen Mills Limited Vs. ITO [ 1997 (12) TMI 12 - SUPREME COURT ] In the instant case, the A. O. has disposed of the objections of the petitioner by passing a speaking order considering all legal and factual aspects, which are just and proper, and do not call for any interference by this Court, exercising the jurisdiction under Article 226 of the Constitution of India. - Decided against assessee.
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2021 (6) TMI 637
Maintainability of appeal v/s writ petitions - writ petitioners, strenuously contended that it is the case where the respondents themselves admitted certain vital facts and those admitted facts were not considered by the Assessing Authority and therefore, the order impugned is liable to be set aside - legality of investments - HELD THAT:- When the contentions of petitioners are extracted in the counter-affidavit, that cannot be construed as an admission. By extracting the abovesaid statement in the very same paragraph, the respondents have stated that the Mauritius Company had simply been used by the UAE Company to hoodwink the taxing authorities in India, whereas actually, it is the UAE Company which has made the investment in the Assessees-Company . Therefore, the mere contention raised by petitioners regarding the alleged admission by the respondents, is incorrect and it is mere extraction of the averments of petitioners in their affidavit. This Court is of the considered opinion that all these mixed question of facts and law are to be adjudicated by the Appellate Authority in the present case with reference to the original documents and evidences. Such an exercise cannot be done by the High Court in writ proceedings. The High Court cannot proceed with these complicated facts merely based on the affidavits and counter-affidavits filed by the respective parties. It requires some deliberation and exhaustive enquiry, which is to be done by the Appellate Authority by examining the original documents and evidences. Thus, interference, in such circumstances, in a writ jurisdiction, is not preferable and the High Court may allow Assessees to prefer an appeal, so as to adjudicate the disputed question of facts as well as other legal grounds raised, including the violation of principles of natural justice. The Appellate Authorities are empowered to set aside, modify or to remand the matter back to the Original Authority, as the case may be. When such a power has been conferred on the Appellate Authorities, interference by the High Court in a writ jurisdiction may not be preferable. Thus this Court has no hesitation in arriving a conclusion that petitioners have not exhausted the appellate remedy provided under Section 246A of the Income Tax Act. Thus, petitioners are at liberty to prefer an appeal by following the procedures contemplated. In the event of filing any appeal, the Appellate Authority is bound to consider the same and pass orders on merits and in accordance with law and by affording an opportunity to the parties concerned. This Court has no hesitation in arriving a conclusion that petitioners have not exhausted the appellate remedy provided under Section 246A of the Income Tax Act. Thus, petitioners are at liberty to prefer an appeal by following the procedures contemplated. In the event of filing any appeal, the Appellate Authority is bound to consider the same and pass orders on merits and in accordance with law and by affording an opportunity to the parties concerned.
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2021 (6) TMI 635
Disallowance of prior period expenses - HELD THAT:- From communication dated 19.10.2010 addressed to the Assessing Officer, it is evident that the claim was made with regard to prior period expenses before the Assessing Officer again. The assessee had filed the written submissions before the Commissioner of Income Tax (Appeals) in which claim with regard to prior period expenses was made. The Commissioner of Income Tax (Appeals) had passed the Assessing Officer to submit a remand report, which was submitted by the Assessing Officer. On the basis of material available on record, the Commissioner of Income Tax (Appeals) as well as the tribunal have allowed the claim with regard to the assessee's prior period expenses. The first substantial question of law is therefore, answered against the revenue and in favour of the assessee.
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2021 (6) TMI 634
Reduction of provision for bad and doubtful debts written back credited to profit and loss account for computation of book profit under Section 115JB - Disallowance of estimated expenses under Section 14A of the Act for computation of book profit under Section 115JB - no notice under Section 143(2) of the Act issued on the revised return - HELD THAT:- Admittedly, the first three issues involved in this appeal are covered by decisions of this Court in the case of the assessee as well as in GOKALDAS IMAGES P. LTD.[ 2020 (11) TMI 345 - KARNATAKA HIGH COURT ] .Therefore, substantial question of law Nos.2 to 5 are answered against the revenue Validity of assessment - absence of notice under Section 143(2) - HELD THAT:- Since the issue with regard to validity of the proceedings on account of absence of notice under Section 143(2) of the Act has not been examined by the Tribunal, therefore, we set aside the order of the Tribunal and remit the matter to the Tribunal to consider the effect of the assumption of jurisdiction by the Assessing Officer on account of non issuance of notice under Section 143(2) of the Act. Since the matter is being remitted to the Tribunal therefore, it is not necessary for us to deal with the first substantial question of law.
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2021 (6) TMI 625
Addition u/s 69A - assessment was selected for limited scrutiny for verification of cash deposits made into savings bank - HELD THAT:- As assessee has not been given a proper opportunity to explain the source of cash deposit. Before the A.O., the assessment proceedings were getting time barred and only two hearings were given to the assessee to furnish the necessary details. Before the CIT(A), necessary details explaining the source of cash deposits were placed on record. CIT(A) called for a remand report from the A.O. The A.O. furnished the remand report without considering the additional evidence placed before the CIT(A). The A.O. also did not provide an opportunity of hearing to the assessee to substantiate his case. As given the facts and circumstances of the case, the matter needs to be considered afresh by the A.O. The A.O. shall consider the evidence placed by the assessee before the CIT(A) to determine the source of cash deposit, whether it is genuine or not. (The A.O. shall also examine whether assessee has disclosed any income u/s 44AE of the Act for the relevant period). The A.O. shall afford a reasonable opportunity of hearing to the assessee. The assessee shall cooperate with the revenue and shall not seek unnecessary adjournment. Appeal filed by the assessee is allowed for statistical purposes.
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2021 (6) TMI 623
Disallowance u/s 54F - assessee did not deposit unutilized amount in capital gain accounts scheme as required u/s 54F - HELD THAT:- As relying on SHRI RAMAIAH DORAIRAJ VERSUS INCOME TAX OFFICER, WARD 4 (2) (2) , BANGALORE. [ 2020 (12) TMI 597 - ITAT BANGALORE] , VENKATA DILIP KUMAR [ 2019 (11) TMI 416 - MADRAS HIGH COURT] we direct the A.O. to allow the claim of the assessee after verifying the details of investment made in the purchase of new flat by the assessee, i.e., whether the investment has been made within the period prescribed u/s 54F - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (6) TMI 621
Exemption u/s 11 - assessee was granted registration u/s 12A of the Act in the year 1980 since then the assessee was having registration u/s 12A - DIT(E) cancelled the registration u/s 12AA of the Act on the ground that the assessee violated the provision of section 13(3) of the Act for taking loan and donating the same to the sister concern without carrying out any charitable activity - DIT(E) while cancelling the registration, observed that the main objective of the assessee trust was running of a hospital but as per the examination of books of account for the Assessment Years 2005-06 to 2009-10, a very meager receipt from OPD was disclosed HELD THAT:- In the opinion of DIT(E), it is clearly violation of provision of law to divert the property of assessee trust to others for non-charitable activities. In the opinion of Ld. DIT(E), there was unreasonable and excessive benefit which was given to the related parties which is clearly hit by section 13(1)(c) r.w. section 13(3) of the Act, hence, attracts action for denial of exemption u/s 12A - Undisputedly, the words as obtained registration at any time was inserted in section 12AA(3) of the Act w.e.f 01.06.2010. DIT(E) has cancelled the registration since inception - as contended by assessee that the cancellation could not have been made prior to the insertion of the provision thus, the DIT(E) clearly exceeded the jurisdiction. Assessee trust is also registered u/s 10(23C) of the Act, therefore, provision of section 13(5) of the Act is not applicable - The factum of registration u/s 10(23C) of the Act is not rebutted by the Revenue. DIT(E) is empowered to cancel the registration u/s 12AA(3) of the Act if he is satisfied that the activities of such trust or institution are not genuine and are not being carried out in accordance with its objectives of the trust/institution as the case may be - in the present case, the sole ground of cancellation of registration is that the assessee trust obtained a loan paid interest thereon and donated this sum to another trust. Admittedly, the other trust was also granted registration u/s 12A of the Act and its registration has not been cancelled and author of both the trusts is same person. We are unable to sustain the action of Ld.DIT(E) firstly, the registration has been cancelled from inception i.e. prior to even when the trust that had obtained registration were brought within the ambit of section 12AA (3) of the Act. DIT(E) has proceeded purely on the basis that the assessee trust had donated the amount which it had borrowed to other charitable trust without pointing out as to under what provision of law, such action is prohibited. Moreover, it is settled position of law that at the time dissolution of trust, the property of trust would go to another charitable trust. DIT(E) s apprehension that undue benefit is given to sister concern is misplaced. As the alleged sister concern is also a charitable trust, the donation from one charitable trust to another charitable trust is not prohibited under law.DIT(E) himself has recorded that the assessee trust has carried out some medical OPD in accordance with the objects of the trust. It cannot be construed that the activities of the assessee trust are not genuine. We, therefore, set aside the impugned order and restore the registration granted u/s 12A - Thus, grounds raised by the assessee in this appeal are allowed.
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2021 (6) TMI 620
Admissibility or otherwise of assessee s subsequent claim for treatment of Excise Duty Refund as capital in nature without filing any revised return - HELD THAT:- Allowability of cess u/s 37 has been examined by the Co-ordinate Bench of ITAT in ITA No. 685/Cal./2014 [ 2018 (11) TMI 1611 - ITAT KOLKATA ] wherein the amount of the cess paid has been held to be an allowable deduction. We find that the Hon ble High Court of Judicature for Rajasthan at Jaipur in the case of Chambal Fertilizers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT ] held that in view of the Circular of CBDT where the word cess is deleted, the claim of the assessee for deduction is acceptable. In that case, the Hon ble High Court held that there is difference between the cess and tax and cess cannot be equated with the cess. Hence, keeping in view the provisions of the Act, Circular of the CBDT and judicial pronouncements, we hereby hold that the assessee is eligible to claim the deduction of the cess as per the provisions of Section 37 of the Income Tax Act. We find nothing on record on behalf of the Department to take a different view. Therefore, to preserve the consistency in view, as approved by the Hon ble Supreme Court in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT ] and respectfully following the view taken by coordinate Bench, we allow the claims of assessee.
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2021 (6) TMI 617
Rectification u/s 154 - eligible for deduction u/s 80IA (4) - HELD THAT:- There is no doubt that the assessee has suppressed the facts of his activity and filed return of income before obtaining report in prescribed Form no. 3 CEB dated 22.10.2011. Since this is the 8th year for claiming deduction u/s 80 IA (4) considering the submissions from both the sides we remit this issue back to the file of AO for de-novo assessment. Needless to say that the assessee shall be given a reasonable opportunity of hearing. Assessee is directed not to seek unnecessary adjournments, and appear before the Assessing Officer on or before 30.09.2021 within three effective opportunities at assessee s own risk and responsibility. Assessee s appeal is allowed for statistical purposes
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2021 (6) TMI 616
TP Adjustment - assessee has earned management fees from two of its Associates Enterprises - HELD THAT:- The said income has been credited in assessee s Profit Loss Account as other operating revenues under the head revenue from operations. The same is evident from Note-19 of assessee s financial statements. Similar figure has been reported as earnings in foreign exchange (rendering services) in schedule annexed to and forming part of the Balance Sheet. Similar figure was noted by Ld. TPO while re-working segmental results which has already been enumerated by us in preceding para-4.1 of this order. Quite clearly, the said income stood credited to assessee s Profit Loss Account and form part of the assessee s financial statements. The same has already been considered while computing assessee s income. The assessee has debited Selling Distribution Expenses forming part of the Balance Sheet. The break-up the same was already provided by the assessee in its submissions during appellate proceedings. This amount include inter-company service fees expense of ₹ 427.54 Lacs which after including foreign exchange difference of ₹ 56.20 Lacs comes to ₹ 483.74 Lacs. The assessee has remitted ₹ 483.74 Lacs after deduction of tax at source, the details of which have already been given by the assessee in the impugned order. The impugned amount as already forms part of assessee s income and there is no concealment of income as alleged by Ld. CIT(A) in the impugned order. The figures in Form No.3CEB has been reported on net basis which at the most, could be an inadvertent / bona-fide / oversight error. But on the given factual matrix, there would be no case to make impugned additions in the hands of the assessee. The Ld. CIT(A), without considering assessee s submissions, erred in making enhancement in the hands of the assessee. Thus we have no hesitation in deleting the same.
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2021 (6) TMI 615
Inventories written off - expired goods could not be sold thus destroyed - HELD THAT:- Assessee, in the rejoinder, submitted that sufficient documentary evidences were submitted and the amounts written-off were in accordance with the report of M/s Grant Thornton with respect to inventories. The assessee reiterated that the expired goods could not be sold as per FDA guidelines and there was no option except to destroy the same. CIT(A), after considering assessee s documents / submissions as well as remand report, similarly observed that there was no dispute that the stock had already expired and the claim was backed by sufficient documentary evidences. The waste disposal management company confirmed collection of expired goods from the assessee. The expired pharmaceuticals products could not even be sold as scrap and they have to be destroyed as per FDA guidelines. Therefore, the claim was justified. Aggrieved, the revenue is in further appeal before us. As well as issue is quite identical to issue in AY 2011-12. The assessee, in our considered opinion, was successful in substantiating its claim of write-off of inventories. Bad Debts written-off - debts written-off were taken into account in relevant previous year or earlier previous years while computing the income of the assessee - Since the assessee furnished the details of debts written-off along with copies of sales invoices, the said fact was established and therefore, the claim could not be denied.HELD THAT:- We find that this issue has been clinched in correct perspective in the impugned order. The assessee had filed complete list of debtors along with the copies of sales invoices which established that the conditions of Sec.36(2) were duly fulfilled by the assessee to make a valid claim u/s 36(1)(vii). Undisputedly, the debts have been written-off by the assessee in the books of accounts. Therefore, the conditions of Sec. 36(1)(vii) r.w.s. 36(2) were duly fulfilled and the claim was allowable in terms of CBDT Circular No.12/2016 dated 30/05/2016 which has been issued after considering Hon ble Apex Court s decision in TRF Limited [ 2010 (2) TMI 211 - SUPREME COURT] . Therefore finding no infirmity in impugned order on this issue, we dismiss this ground of revenue s appeal. Investments written-off - as assessee made certain advances to an entity and wrote-off the outstanding amount during the year which was claimed as deduction but assessee could not sufficiently explain the same during assessment proceedings, the same was disallowed by Ld. AO in terms of Section 36(1)(vii) r.w.s 36(2) - HELD THAT:- We find that the assessee had given certain advance to M/s LMPL pursuant to an understanding in normal course of its business so as to acquire limited right to use and exploit the know-how for manufacturing of six drug formulations. However, the assessee was already in the business of manufacturing pharmaceutical products and the technical know-how was only in respect of six drug formulations and to get technical information which would have enabled the assessee to set up new product lines to the existing business. Nevertheless, no new manufacturing unit would have come into existence and no new asset was proposed to be acquired by the assessee. The advances were given in the normal course of business out of commercial expediency which would have improved the profit-making apparatus without disturbing the capital setup of the assessee. There is no dispute that the said advances became irrecoverable and accordingly, the same were written-off in the books of accounts. Thus advances lost during the course of business would be business losses and hence, an allowable deduction. Respectfully following the same, we direct Ld. AO to grant the deduction of amount so written-off by the assessee. This ground of assessee s appeal stands allowed.
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2021 (6) TMI 614
Addition u/s 43CA - consideration received in respect of agreements to sale executed during the year in respect of redevelopment project under construction - HELD THAT:- Additional area has been sold by the assessee pursuant to the development agreement which has been entered into by the assessee during financial year 2010-11 which is prior to introduction of Sec.43CA. The provisions of Sec.43CA has been inserted by the legislatures only with effect from 01st April, 2014 and the same would not apply to any such agreements as entered into by the assessee in earlier years as held in Pr. CIT V/s Swananda Properties (P.) Ltd. [ 2019 (9) TMI 1270 - BOMBAY HIGH COURT ] The Hon ble Court has held that the provisions of Sec.43CA would not have retrospective application and accordingly, do not apply to agreement executed prior to its introduction. The ratio of this decision is squarely applicable to the case of the assessee. Therefore, the impugned additions could not be sustained in the eyes of law on this point alone.
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2021 (6) TMI 613
Unexplained cash credit u/s 68 - exemption claimed u/s 10(38) with respect to Long-Term Capital Gains (LTCG) earned on sale of certain shares was denied - HELD THAT:- Additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. As going by the factual matrix and respectfully following the binding judicial precedents as enumerated in the order, the additions made by Ld. AO and confirmed by CIT(A), are not sustainable in the eyes of law. Therefore, we are inclined to delete the same. Addition of estimated commission also stands deleted. - Decided in favour of assessee.
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2021 (6) TMI 612
Penalty u/s 271AAB/271(1)(c) - cash was seized u/s 132A - disclosure was made by the assessee only because cash was seized by the department - HELD THAT:- A perusal of the same would show that penalty has been proposed by Ld. AO u/s 271AAB of the Act. Another notice has been issued on 22/01/2018 which show-cause the assessee to defend the penalty as proposed in notice u/s 271(1)(c) for concealment of income as well as for furnishing of inaccurate particulars of income - penalty has finally been levied u/s 271(1)(c) for concealment of income as well as for furnishing of inaccurate particulars of income. The chronology of the events would show that Ld. AO has failed to frame as well as specify the exact charge for which penalty was being levied against the assessee. Both the stated limbs i.e. concealment of income furnishing inaccurate particulars of income, as per settled legal position, carry different connotations and operate differently. As obligatory on the part of Ld. AO to frame specific charge against the assessee before levying penalty. The failure to do the same would render the penalty null and void in the eyes of law. No doubt, the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of section 271(1)(c) - Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment or nondisclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. In view of the fact that returned income has finally been accepted by the revenue, no penalty could be imposed. - Decided in favour of assessee.
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2021 (6) TMI 611
TP Addition - comparable selection - international transaction of Provision of Software Development services - HELD THAT:- InfoBeans cannot be excluded from the tally of comparables on account of extraordinary financial event of merger, more specifically, when the otherwise similarity of this company has not been challenged on behalf of the assessee.We, therefore, countenance the inclusion of this company. Cybercom Datametics Information Solutions Ltd - As this comparable was chosen by the TPO, the primary onus of demonstrating its comparability, was upon him. Except for repeated accentuation of comparability in his order, the TPO has nowhere proved his point in the light of the Annual report of the company or any other relevant material. DR also could not point out from the Annual report of the company or any other material that it was rendering only Software services. Per contra, the Annual report of the company states that it is engaged in rendering Technical services in addition to Software services a situation, which does not match with the assessee on holistic basis. On the failure of the Revenue to establish the comparability of this company chosen by the TPO, we direct to exclude it from the list of comparables. To sum up, we set-aside the impugned order and remit the matter to the file of AO/TPO for re-determining the ALP of the international transaction of Provision of Software Development services in the light of our above discussion
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2021 (6) TMI 610
Disallowance u/s 14A - assessee made suo-motu disallowance under Rule 8D(2)(i) and 8D(2)(ii) - contention of assessee is that the assessee is having sufficient own interest free funds to cover the investments - HELD THAT:- The presumption is that the investments are made from interest free funds available with the assessee. We find that similar plea was raised by the assessee in assessment year 2010-11. The Co-ordinate Bench [ 2020 (3) TMI 942 - ITAT MUMBAI] restored the issue back to the file of Assessing Officer to examine the availability of assessee s own interest free funds viz-a-viz investments made. Since, the issues raised in present appeal are identical, additional ground No.1 2 are allowed for statistical purposes in similar terms. The Assessing Officer is directed to re-examine disallowance under section 14A r.w.r.8D in line with above directions of the Tribunal. Disallowance of provision made for leave salary under section 43B(f) - HELD THAT:- As decided in own case [ 2020 (3) TMI 942 - ITAT MUMBAI] Tribunal allowed relief to the assessee by following the decision of the Hon ble Apex Court in the case of Bharat Earth Movers vs. CIT[ 2000 (8) TMI 4 - SUPREME COURT] Dehors the issue of constitutional validity of clause(f) to section 43B of the Act, the Co-ordinate Bench after considering the issue on merits has deleted the addition. Taking into consideration, entirety of facts we respectfully follow the decision of Tribunal in assessee s own case for assessment year 2008-09 and confirm the findings of CIT(A) in deleting the disallowance.
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2021 (6) TMI 609
Denial of exchange loss - Unexpalined loss from the income - provisions of section 43A applicability - HELD THAT:- Since, asset acquired was not depreciable, therefore, loss cannot be allowed. We find that the learned CIT(A) upheld the action of the AO on the ground that no transaction has taken place during the year, for no payment was made during the year. Further, assets were not acquired during the year. Loss can be allowed in the year in which transaction had taken place. Further, such exchange loss was capital loss and not revenue loss. It is the submission of the learned counsel for the assessee that the stand of the department is inconsistent since in AY 2008-09, foreign exchange gain was taxed as income as the same was not reduced in computing the income. Similarly, in AY 2010-11, the net gain was offered to tax. However, due to inconsistent stand of the department, the gain was claimed as not taxable and the CIT(A) gave certain directions which has been reproduced in the preceding paragraphs. We find some force in the arguments of the learned counsel for the assessee. We find the assessee has prepared its accounts as per AS-11 which deals with effect of changes in foreign exchange rate and such difference is required to be recognized as income or expenditure. The Hon ble Supreme Court in the case of CIT v Woodward Governor India P. Ltd.[ 2009 (4) TMI 4 - SUPREME COURT] has held that AS-11 is mandatory and is required to be followed in computing the income as required by section 145(1) read with section 145(2) of the Act. The Hon ble Delhi High Court in the case of CIT v. Virtual Soft Systems Ltd. [ 2012 (2) TMI 120 - DELHI HIGH COURT] has explained the duty of the AO to follow Accounting Standards. In view of the above discussion, following the decision of the Hon ble Supreme Court in the case of CIT v Woodward Governor India P. Ltd. (supra), where it is held that AS-11 is mandatory and required to be followed in computing the income and the decision of the Hon ble Delhi High Court in the case of CIT vs Virtual Soft Systems Ltd.(supra), holding that it is the duty of the AO to follow accounting standards and following the rule of consistency, we hold that the foreign exchange loss of should be allowed as revenue expenditure. Enhancement of the income of the assessee being the depreciation allowed by the Assessing Officer on utilization of FCCB proceeds towards depreciable assets - additional ground relates to the allowability of foreign exchange fluctuation loss as an allowable deduction u/s 37 - HELD THAT:- Since, the assessee in the instant case has attributed the increased liability to the cost of the assets and the depreciation was allowed, therefore, although the assessee has a good case to argue that exchange fluctuation loss attributable to depreciable assets acquired in India is an allowable revenue expenditure, however, it would require tedious exercise of modifying assessments for number of year. Therefore, we hold that the assessee is entitled to depreciation on exchange loss and the additional grounds raised by the assessee for AY 2009-10 becomes in-fructuous. It is held in the case of CIT v. Industrial Finance Corp of India Ltd. [ 2009 (9) TMI 877 - DELHI HIGH COURT] that revenue expenditure (loss) is allowable in the year in which it is incurred but where the assessee has spread it over, the Court would allow the benefit. We find merit in the argument of the learned counsel for the assessee that it cannot be held that neither depreciation on enhanced cost due to exchange fluctuation is to be allowed nor the loss itself was to be allowed more so because claim to this effect was raised both before the Assessing Officer as well as the CIT(A). Accordingly, ground no.3 raised by the assessee is allowed and additional ground being infructuous is dismissed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We find before the AO, the assessee has categorically stated that the assessee has not received any dividend income during the year. This fact was not controverted by the AO or the CIT(A). Even the learned DR also could not bring any material before us to show that the assessee has received any dividend income during the year. We, therefore, following the decision of the Hon ble Delhi High Court in the case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] hold that the learned CIT(A) is not justified in sustaining the disallowance made by the AO u/s 14A r.w.r 8D when assessee has admittedly not received any dividend during the year. Accordingly, ground raised by the assessee on this issue is allowed. Accrual of income - Taxability of discount received on FCCB - HELD THAT:- CIT(A) was not justified in holding the discount received through buyback of FCCBs at a discounted price as income of the assessee. Accordingly, the order of the learned CIT(A) is set-aside and the grounds raised by the assessee on this issue are allowed.
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2021 (6) TMI 607
Bogus share capital - Addition u/s 68 - identity and creditworthiness of subscribers proved or not? - admission of additional evidence by assessee - HELD THAT:- Once having accepted the fact that identity and creditworthiness of subscribers is not in doubtful, there is no reason for the AO as well as the ld.CIT(A) to doubt the genuineness of transactions merely for the reason that share certificates issued to shareholders was not furnished. CIT(A) himself has recorded in his appellate order that the assessee has filed all forms required to be filed before the Registrar of Companies for increase in authorized share capital. Once, necessary statutory forms are filed before competent authorities, then issue of share certificates to shareholders is only a formality. Therefore, for that reason doubting genuineness of transactions is not correct. Be that as it may, the assessee has filed paper-book enclosing copies of share certificates issued to shareholders - The assessee claimed that copies of share certificates were not placed before the lower authorities. Therefore, we are of the considered view that the issue needs to go back to file of the AO to verify additional evidences filed by the assessee. Hence, we set aside the appeal to file of the AO and direct him to relook the issue after considering additional evidences -Appeal filed by the assessee is treated as allowed for statistical purpose.
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2021 (6) TMI 606
TDS u/s 195 - Disallowance u/s 40(a)(i) in respect to payment made to Trans Coral Shipping, FZE ,Sharjah (UAE) arbitrarily - HELD THAT:- The fact that the commission receipt earned by the assessee company is paid to the agent and the same has been determined as 1/3rd of commission receipt plus incentive where the total receipts exceeds a pre-determined threshold cannot be sole determinative of a joint venture and is mere a mode of determination of fees as agreed between the two companies. The nature of such payment is therefore clearly that of sales promotion expenditure for services rendered outside of India where the corresponding revenues have been offered to tax by the assessee company. CIT(A) has also treated the same as sales promotion expenses and has recorded a similar finding and therefore, the nature of payment is not in dispute. Such sales promotion expenditure paid and credited to the account of the non-resident entity for the services rendered outside India will not fall in the category of the income received or deemed to be received in India as well as accrues or arises or deemed to accrue or arise in India. Further, the provisions of section 9(1)(vii) are not attracted in the instant case as the assessee company has utilized the services of the non-resident service provider outside of India for the purposes of earning commission income from its customers/shipping companies outside of India. In other words, where the source of assessee s income for which the services are utilized is outside of India and the services are also rendered outside of India, the deeming provisions of section 9(1)(vii) are not attracted. Thus, the said amount paid to non-resident entity does not fall in the scope of total income of non-resident entity and consequently it is not chargeable to tax in India under the provisions of the Act. Even otherwise, the said income in the hands of non-resident has to be considered in the light of the provisions of DTAA between India and the Country of the nonresident, i.e UAE. In the absence of Permanent Establishment of the nonresident in India during the financial year relevant to impugned assessment year and any income attributable to such Permanent Establishment, such business income is not chargeable to tax in India. When the amount paid by the assessee is not chargeable to tax in India then the assessee is not liable to deduct TDS u/s 195 and consequently the provisions of Section 40(a)(i) of the Act cannot be invoked for making the disallowance. Disallowance so made by the AO U/s 40(a)(i) of the Act is hereby deleted and ground of appeal is allowed. Disallowance of expenses debited to profit loss account, i.e. vehicle, diesel Petrol expenses, entertainment expenses, telephone mobile expenses and travelling expenses - HELD THAT:- We find that the expenses have been disallowed for the reason that personal use of vehicles and incurrence of other expenditure for personal purposes of the directors of the company cannot be denied. The assessee being a corporate entity, there cannot be any personal expenditure and secondly, where the directors of the company are alleged to have benefitted from use of vehicle and incurrence of other expenditure, the same can be brought to tax in their individual hands by way of perquisites being provided by the company. However, as far as the assessee is concerned, where the expenses are incurred for the purposes of the business, the same cannot be disallowed. In the result, the disallowance so made is directed to be deleted and the ground of appeal is allowed.
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2021 (6) TMI 601
Revision u/s 263 - nature of expenditure - expenditure on foreign exchange fluctuation - revenue or capital expenditure - exchange rate difference on returning share application money is required to be treated as capital expenditure, same was required to be disallowed as per the contents of show cause notice - HELD THAT:- It is settled position in law that issuance of shares is not a trading transaction. On issuance of shares, the assets of the company are increased by the amount so obtained from the share subscribers. The amount of share application money is not profit or gain of trade undertaken by the assessee company and the share application amount are not to be brought in to the accounts for taxation purpose being on the side of capital account. Capital expenditure is allowable deduction if statue expressly so provided. Similarly an item of expenditure, though wholly and exclusively incurred for the purpose of business or profession, is not admissible as an allowance if it is of capital in nature. The criteria which can be invoked in distinguishing between the capital receipt and revenue receipt will also serve to distinguish between capital disbursement and revenue disbursement. The issue involve in the present case is directly covered by the decision of Jagatjit Industries Ltd. [ 2009 (9) TMI 62 - DELHI HIGH COURT] held that, once that aspect becomes clear and the entire money raised through issue of equity shares is to be treated as share capital, the gains on account of foreign exchange fluctuations, in the event of such share capital being collected in foreign exchange, the determination as to whether it is to be treated as capital receipt or revenue receipt cannot depend upon the end-use of the share capital. There is no averment in the reply of the assessee that the amount of share application money was received for brand building of the assessee company. Again turning to the core issue that the share application money in nothing but a capital receipt and its return will not change its character. Even otherwise the assessee has not incurred any other amount except the exchange rate difference, which in our considered view is nothing but a capital expenses . Thus, in view of the aforesaid legal discussion, we are of the considered view that order passed by Assessing Officer is not sustainable in law and hence not only erroneous but in so far as prejudicial to the interest of the Revenue. Therefore, the twin conditions that orders is erroneous and in so far as prejudicial to the interest of revenue, as prescribed under section 263, are fulfilled in the present case. Thus, the order passed by Ld. PCIT passed under section 263 is upheld. Appeal of the assessee is dismissed.
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2021 (6) TMI 600
Revision u/s 263 - non application of mind by AO on search figures of income - PCIT stated that assessing officer has not applied his mind and he accepted the figure explained by the assessee during survey proceedings, therefore order passed by the assessing officer is erroneous and prejudicial to the interest of revenue - HELD THAT:- Assessee has explained the survey team about the meaning of brief amount recorded in the diary, say for example 400 L means 4 lacs and 200 L means 2 lacs. The said cited interpretation has been accepted by the survey team. AO also gone through these answers and questions and applied his mind while passing the assessment order under section 143(3) of the Act dated 20.12.2016. Since the Assessing Officer has taken into account, the survey material and the question and answers asked during the survey proceedings and explanations of the assessee and thus made adequate inquiry and then after he has passed the order under section 143(3) of the Act dated 20.12.2016, therefore order passed for AO should not be erroneous. The Learned Counsel also submitted before us an affidavit which is placed at page no.53 of the paper book wherein assessee has mentioned the additional income and stated that he had declared additional income for the current financial year. PCIT has not brought any material to justify the alleged income of ₹ 210 crores.Thus, we note that allegation made by the ld PCIT is based merely on suspicion and conjecture. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the assessing officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. AO has examined other issues raised by ld PCIT, such as returned income, the pre-survey period and post -survey expenses and sundry creditors for land development and land leveling expenses. In the conclusion, we are of the view that none of the reasons set out by the ld PCIT for invoking the jurisdiction under section 263 of the Act are sustainable. The impugned order of ld PCIT has to be quashed for the reason that order of the assessing officer sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the assessing officer ought to have made in the given facts and circumstances of the case. We accordingly quash the order under section 263 of the Act and allow the appeal of the assessee.
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2021 (6) TMI 597
Deduction u/s 36(1)(vii) - Assessee filed the revised return of income by claiming provision for bad and doubtful debts - HELD THAT:- There is no doubt that the assessee is engaged in the business of banking and has made provision for bad and doubtful debts for loans and advances. The AO doubted whether it was a reserve or provision. But, the assessee in the second revised computation of income in the profit loss account, it changed as provision in place of reserve As decided in M/S. VIJAYA BANK, [ 2020 (11) TMI 486 - KARNATAKA HIGH COURT ] deduction u/s 36(1)(vii) can be allowed when the provision is made for bad debts in P L Account. It is clear from the order of the CIT(A) that in the revised Profit Loss Account, the disputed issue was debited in the Profit Loss Account. Therefore, following the ratio laid down by the Hon ble Court, we set aside the order of the CIT(A) and direct the AO to allow the assessee s claim of the provision for bad and doubtful debts - Appeal of the assessee is allowed.
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2021 (6) TMI 596
Disallowance of interest - assessee made advance payment for purchase of flats/office premises for investment purposes - HELD THAT:- The finding of the case decided in Reliance Utilities Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is duly applicable to the facts of the present case in which it is specifically held that if there are funds available both interest free and overdraft and/or loans taken then a presumption would arise that investments would be out of the interest free fund generated or available with the company, if the interest free funds are sufficient to meet the investment. Since the issue is squarely covered by the decision of the Hon ble ITAT in the assessee s own case [ 2020 (7) TMI 764 - ITAT MUMBAI] therefore, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. Disallowance of rent expenses - assessee has taken the premises at Vapi, Lonavla for the purpose of business - HELD THAT:- The rent agreement speaks about this fact that the property was taken for the business purposes. Rent has also been mentioned in the agreement. The assessee also book the property on Lonavla on rent in sum of ₹ 10,000/- per month which was for the residence of employees. The TDS was deducted from every property. Nothing is on record to which it can be assumed that the property was not used for the business purposes. At least, it is necessary on the part of the AO to collect same material to which it can be assumed that the property was not taken on rent for the business purposes. The copy of agreement with regard to the residential property at Vapi dated 01.10.2011 to 30.09.2014 and dated 01.10.2014 to 30.09.2017. The copy of receipt of rent paid for the period of on 01.04.2012 to 31.03.2016. No cogent and convincing reason on the record to decline the claim of the assessee. Taking into account all the facts and circumstances, we are of the view that the finding of the CIT(A) is not justifiable, hence, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee.
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Customs
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2021 (6) TMI 643
Rejection of claim for Preferential Duty - Areca nuts - certificate of origin (COO) - benefit of N/N. 26 of 2000 - remission of duty assessed under section 17 of the Customs Act, 1962 - HELD THAT:- In the present case, the claim for preferential duty has been rejected unilaterally and without assigning any reasons whatsoever by the Deputy Commissioner of Customs, an authority not competent to have rejected the claim as per the proviso to Section 28-DA(4). Though the consignment has been imported in February 2021, there has been no initiation of enquiry by the proper officer under sub-Section (3) for further enquiry into the COO or any other aspect of the matter that he deems relevant. The impugned order rejecting the claim for exemption has come to be passed by the 2nd respondent, the Deputy Commissioner of Customs, who is not the competent authority to have rejected the claim of exemption, since such rejection could only have been by the Principal Commissioner or Commissioner and that too, for reasons to be recorded. This is a flaw that goes to the root of the matter, the procedure adopted in the impugned proceedings. The timeline for response by the Verification Authority is set out in regulation 63b, which is sixty days from date of request. In the present case, this request has not been initiated and the Department has been sitting pretty on the consignment despite requests for release, the petitioner repeatedly drawing attention to the fact that the consignment comprises perishable goods - The certificate of origin in this case as well as the clarification obtained by the petitioner have been obtained from the Assistant Director acting for the Director General of Commerce in the Department of Commerce, Colombo. The designated Authority under the IFSTA is the Director General of Commerce, Department of Commerce, also the authority which has issued the COO and subsequent clarification. The objection of the respondents in regard to the COO as well as their contention that the clarification dated 19.03.2021 ought to have been received through proper channel is thus, hypertechnical, to say the least. The petitioner has satisfied the requirement of production of a valid COO in this case - petition allowed.
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2021 (6) TMI 628
Jurisdiction - proper officer for issuance of SCN - DRI is proper officer or not - Classification of imported goods - External/Portable Hard Disc Drives - classifiable under CTH 84717020 as Hard Disc Drive or under Tariff Item 84717030 as Removable Disc Drive ? - HELD THAT:- Hon ble Supreme Court in the matter of COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS M/S SUPERTRON ELECTRONICS PVT. LTD. [ 2017 (10) TMI 1281 - SC ORDER] has laid down that Additional Director General, DRI cannot be said to be a proper officer under section 2(34) of Customs Act, 1962 and held that the entire proceedings initiated by ADG, DRI by issuing various show cause notices are invalid without any authority of law and liable to be set aside. In the instant case also the show cause notice was issued by the Additional Director General, DRI under Section 28 ibid, which as per the aforesaid decision of the Hon ble Supreme Court is without any authority of law and therefore the Appeals also deserve to be allowed on this ground itself.
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2021 (6) TMI 622
Classification of imported goods - Pottassium Humate - classifiable under CTH 31052000 or otherwise? - import of goods was denied by the Customs on the ground that it is a restricted item and requires registration from the Central Insecticide Board and Registration Committee - HELD THAT:- Both the authorities have relied upon the test report issued by the Customs Department but the same does not conclusively classify the impugned goods as insecticide. The test report of the Customs only says that it may find use as a plant growth regulator and on that basis, the Customs changed the classification and reclassified the goods under CTH 38089340 which is also not tenable in law in view of the letter dt. 05.11.2020 issued by the Central Insecticide Board and Registration Committee. In the present case, the Assistant Commissioner of Customs passed the order on 05.10.2020 but did not provide the copy of the same to the appellant in spite of the best efforts of the appellant to get the copy. Further the Assistant Commissioner issued the said order only on 11.11.2020 as stated in the order itself, which means after more than one month and in the meantime compelled the appellant to deposit the penalty amount which was deposited by the appellant on 06.10.2020 even without the issuance of the order by the original authority - there are no justification for issuing the order by the Assistant Commissioner after the expiry of more than one month when there is a live consignment involved in this case. The impugned items is not included in the Schedule under the Insecticide Act, 1968 and hence it is not required registration - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (6) TMI 603
Approval of Scheme of Amalgamation - Section 230-232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Necessary directions regarding issuance of various notices given - the scheme is approved. Application allowed.
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2021 (6) TMI 599
Dispensation with shareholder' meeting - section 230 of the Companies Act, 2013 - whether or not shareholders' meetings could be dispensed with in the first motion of the Scheme Application? - HELD THAT:- It has been mentioned in subsection 9 of Section 230, the Tribunal is given discretion to dispense with calling of a creditors meeting or class of creditors meetings, where such creditors or class of creditors having at least 90% value agree and confirm by way of affidavit to the scheme of compromise or arrangement. But this grant of dispensation has not been extended to the shareholders either in subsection 9 or any other subsection of Section 230 of the Companies Act, 2013. The discretion given to NCLT to dispense with meetings is only limited to creditors meetings but not to shareholders meetings when mandate is such, I don't know how NCLT will get discretion to dispense with holding shareholders meetings. If at all shareholder's meeting is not held, it is quite obvious notice will not go to various regulating authorities to the proposal given by the company. Because of this, the Regulating Authorities will not get a chance to raise their objections before a decision is taken by the company (shareholders) to pass a resolution to the scheme proposed by the Board of Directors - If the shareholder's meeting is not held as stated under Section 230(3) whole process envisaged under Section 230(3)(4)(5)(6) will become redundant, the proposal of dispensation of shareholders meeting is in violation of the procedure laid under Section 230 of the Companies Act, 2013. Whether the concept of two judges and three judges is applicable to NCLT? - HELD THAT:- NCLT is only a fact finding Tribunal constituted under Companies Act 2013, wherein it is categorically mentioned that NCLT shall be constituted with one judicial member and one technical member. When such is the case, is there any scope to constitute three member bench by NCLT on its own? It has to act according to the jurisdiction given to it. It is not a constitutional court and not even a court having jurisdiction under section 9 of CPC to temper its powers beyond the scope and ambit of the Companies Act. The Act 2013 even envisages how to go about when difference of opinion comes in between judicial member and technical member. Of course in Service Tribunal cases, there is a ratio that orders should not be variant on one circular or memorandum given by any Government. Normally Service Tribunals pass orders saying covered case if facts are on the same circular or memorandum. It cannot be so with NCLT because facts in each case are different. It is understandable if any Bench passes an order dealing with an aspect that is not present in the statute, then it could be said that NCLT coordinate Bench order will have persuading effect. Thus, NCLT cannot dispense with holding meetings under section 230(1) of the Companies Act 2013 - application disposed off.
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Insolvency & Bankruptcy
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2021 (6) TMI 626
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - debtor-creditor relationship between Operational Creditor and Corporate Debto or not - pre-existing dispute or not - HELD THAT:- Based on the 'MOU', the dues receivable to Operational Creditor 'Sew-Prasad JV' have been transferred/assigned to the 1st Party, i.e. Sew Infrastructure Ltd (in short 'SIL') w.e.f. 20 May 2016. Therefore the question of maintainability of the Petition by Operational Creditor' 'SPJV' arises. Based on the assignment of debt to SEW Infrastructure Ltd, 'SPJV' does not remain an Operational Creditor of the Corporate Debtor 'GIPL' - it is clear that there was no debtor-creditor relationship between Operational Creditor 'SPJV' and the Corporate Debtor' GIPL' on the date of filing of the Petition, i.e. on 21 September 2017 under Section 9 of the I B Code, 2016. Pre-existing dispute or not - HELD THAT:- Undisputedly AJVPL failed to make the payment as per the terms of MOU. Accordingly, consequences of the breach of the terms of MOU dated 14 December 2013 and further violation of the terms of MOU dated 20 May 2016 cannot be determined in a summary jurisdiction given to the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 - Before the issuance of the demand notice, several correspondences are showing the existence of a dispute between the parties. The alleged claim regarding the liability of the Corporate Debtor to pay ₹ 2.03 crores to Respondent No.1 SPJV was subject to the completion of work to the satisfaction of the Corporate Debtor GIPL. In response to the letter of the Operational Creditor dated 12 July 2014 for releasing the amount of ₹ 2.03 crores, the Corporate Debtor intimated that the payment against the withhold amount could be made after the completion of work. It was suggested by the Corporate Debtor to speed up the pace of the work and complete their pending assignments at the site. The Operational Creditor, in its letter dated 23 January 2015, wrote to the corporate debtor for releasing Rs. two crores, which were withheld against their pending works. In this letter, the Operational Creditor contended that it has already completed almost all the pending works except the shifting of equipment and machinery. Therefore the request was made to at least release rupees one crore from the pending dues - the Appellant has proved a pre-existing dispute prior to issuance of the demand notice under Section 8 of the Insolvency and Bankruptcy Code 2016. In the instant case, the claim under the Settlement Agreement, falls within the ambit of the term 'dispute' about the existence of debt . The alleged claims regarding the Corporate Debtor's liability to pay ₹ 2.03 crores to the Operational Creditor was subject to the completion of work to the satisfaction of the Corporate Debtor. The Operational Creditor relied on the merits certificate to show the completion of work to the satisfaction of the Corporate Debtor - The dues receivable by the 'SEW and Prasad JV' is assigned to SEW Infrastructure Ltd. However, the Operational Creditor claims that given the MOU dated 20 May 2016, Rs. eight crores was paid to Intercontinental Infrastructure Ltd by AJVPL. But AJVPL failed to pay the said amount of Rs. eight crores; the MOU has been terminated. There is no debtor-creditor relationship between the Operational Creditor 'SPJV' and the Corporate Debtor 'GIPL'. Therefore, the Petition filed U/S Sec 9 is not maintainable on this ground - Appeal allowed.
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2021 (6) TMI 608
Maintainability of application - initiation of CIRP - mismatch between the date of default and date when OTS entered - date of default if any could be only after the acceptance of this OTS, which is not satisfied in the present case - HELD THAT:- The Adjudicating Authority found that there was debt due and default and the Application filed by the Bank was complete and that the same deserves to be admitted. It can be seen that there was an earlier Offer of settlement dated 09th November, 2015 and there was yet another offer by way of OTS on 29th March, 2016. After the grant of Loan, the Corporate Debtor made default in payment of instalments - Considering the record, the Loan Account of the Corporate Debtor was in default on 27th December, 2014 and if on 29th March, 2016, the Corporate Debtor entered into the OTS as at Annexure A-6 that is in the context of the Debt already due and in default. Date of Default will not shift. The OTS is only an Acknowledgment of debt due and arrangement how the debt in default would be paid. Annexure A-6 has one condition of ₹ 60 Lakh to be deposited immediately . On being asked, Learned Counsel for Appellant states that, not ₹ 60 Lakhs, but part of it was paid. There are no substance in the appeal - appeal dismissed.
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2021 (6) TMI 605
Seeking explanation for holding back the salaries of Applicants, from Resolution Professional - seeking disbursement of salary - seeking disbursement of superannuation dues - service of notice of termination, if termination is proposed - HELD THAT:- This bench ordered liquidation of the Corporate Debtor and appointed Mr. Divyesh Desai as the liquidator. In view of this, the Applicants are directed to approach the liquidator with proper details of their claims in respect of the salary dues for the CIRP period. The liquidator shall decide the same in accordance with law. Applicant No. 4 has claimed a sum of ₹ 69,73,619/- towards superannuation benefits apart from salary during CIRP. As far as this claim is concerned, major portion of the claim relates to pre-CIRP period and thus he has to file the claim as an Operational Creditor and the liquidator should consider the same in accordance with Law. Application disposed off.
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2021 (6) TMI 604
Condonation of delay in filing the claim before the Resolution Professional of the Corporate Debtor - HELD THAT:- In accordance with section 15(1)(c) of the Code read with regulation 6(2)(c) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), once the application for initiation of the CIRP is admitted by the National Company Law Tribunal (NCLT), a public announcement is required to be released by the IRP for inviting claims - Regulation 12(2) of the CIRP Regulations provides that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the IRP or the RP, as the case may be, on or before the ninetieth day of the insolvency commencement date. This deadline of 90 days was introduced by way of an amendment, with effect from July 2018. Regulation 12(2) of the CIRP Regulations provides that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the IRP or the RP, as the case may be, on or before the ninetieth day of the insolvency commencement date. This deadline of 90 days was introduced by way of an amendment, with effect from July 2018 - Although the introduction of a fixed timeline for submission of claims was more than welcome, the amended Regulation 12 (2) seems to have raised more issues than it purports to resolve. The amended Regulation 12 (2) is silent in regard to the status of creditors who have missed the deadline and are desirous of filing their claims. In the recent orders/judgments, the Hon'ble Tribunals have condoned the delay even after the time period of elapse of ninety days, citing that the amended Regulation 12 (2) is directory. In the present case, the Applicant has failed to establish the reason for the delay in submission of the claim. This led us to the questions that why not the Respondent/RP take cognizance of outstanding statutory dues as per book of accounts of the Corporate Debtor. The Respondent has clearly stated that the alleged dues are not yet quantified and litigations under various authorities are pending - The Respondent has also stated that the Resolution Plan is pending for approval before CoC. Hence, we are of the view that there is no merit in this application. The Applicant has failed to reason out the delay in submission of claim, the quantified amount is also under dispute. Hence, at this fag end of CIRP, this application cannot be entertained. Application dismissed.
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2021 (6) TMI 602
Seeking exclusion of period of 140 days from the CIRP of the Corporate Debtor - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The erstwhile Director had filed an Interlocutory Application for extension of time period wherein the Hon'ble Apex Court vide Order dated 28.07.2020 in Civil Appeal No(s). 2211/2020 extended the time for a period of two months subject to deposition 50% amount within one month and remaining within the next 30 days and further stated that no further extension will be granted - The applicant states that this application is being filed for exclusion of 140 days from the CIRP period i.e., the lockdown period starting from 25.03.2020 to 02.06.2020 (69 days) and further the period from 18.06.2020 to 28.08.2020 (71 days) due to operation of Interim Order passed by the Hon'ble Apex Court vide Order dated 18.06.2020. The applicant states that this application is being filed for exclusion of 140 days from the CIRP period i.e., the lockdown period starting from 25.03.2020 to 02.06.2020 (69 days) and further the period from 18.06.2020 to 28.08.2020 (71 days) due to operation of Interim Order passed by the Hon'ble Apex Court vide Order dated 18.06.2020. The loss of 140 days in the CIRP period is excluded - Application allowed.
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2021 (6) TMI 598
Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is evident, that the Financial Creditors in the CoC are Punjab National Bank with 80% of voting share and Canara Bank with 15% voting share. It appears that the Corporate Debtor is owed to pay ₹ 246.93 Crores to these Claimants. Out of which, the Promoter-Directors have come forward with a Plan valuing ₹ 12.75 Crores to pay within 22 months, however, considering all the materials available before the CoC, it has in its wisdom taken a decision to proceed for liquidation of the Company, instead of approving the Resolution Plan submitted by the Promoter-Directors. As to the approval of the Plan is concerned, as long as the procedure is complied with, the CoC can take commercial decision in the interest of the Creditors which this Bench cannot turn down on hearing the submissions of the Promoter-Directors unless it is hit by procedural compliance laid under the IBC. This application is allowed by ordering liquidation of the corporate debtor.
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PMLA
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2021 (6) TMI 631
Money Laundering - scheduled offences - will the judgments of the Supreme Court rendered under the NI Act can be simply applied to the PML Act? - scope of Section 141 of the NI Act and Section 70 of the PML Act - HELD THAT:- The NI Act offences are not economic offences, unlike offences under the PML Act. A prosecution under Section 138 of the NI Act stems from a civil dispute between the drawer and the drawee of a cheque. It gets a criminal colour, only when the drawer fails to pay the drawee within the stipulated period. Whereas, offences under the PML Act are economic offences and can by no stretch of imagination be equated to a prosecution between a drawer and a drawee under the NI Act. It is well settled that statutes not dealing with the same subject matter cannot be said to be in pari materia. Constitution Bench of the Supreme Court in STATE OF PUNJAB VERSUS OKARA GRAIN BUYERS SYNDICATE LTD. AND OTHERS [ 1963 (11) TMI 74 - SUPREME COURT] has held in no uncertain terms that, even if the language of two provisions of different statutes are identical, it does not follow that they are in pari materia if the scope of the two legislations are different - Section 141 of the NI Act confines itself to a prosecution under Section 138 of the NI Act. It is not a general provision like Sections 34, 107 and 120-A IPC to be applied to all offences. Comparing a prosecution under Section 138 of the NI Act to a prosecution under the PML Act would clearly amount to comparing chalk with cheese. Therefore, there are no hesitation in holding that the rulings under Section 141 of the NI Act would not be of any avail to the petitioners herein. In the opinion of the FATF, Section 70 of the PML Act had been construed, or rather misconstrued, in some quarters to mean that a prosecution for an offence of money laundering against a company was not maintainable without concurrently prosecuting natural persons for offences under the Act - the recommendation of the FATF was incorporated into the PML (Amendment) Bill, 2011. The Bill was, thereafter, referred to a Standing Committee of the Ministry of Finance. The Committee submitted its 56th Report on the PML Amendment Act, 2011 - Explanation 2 to Section 70 was accordingly, inserted vide the PML (Amendment) Act, 2012 (Act 2 of 2013). The prosecution of juristic persons is not contingent upon the prosecution of natural persons for offences under the PML Act - Petition dismissed.
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Service Tax
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2021 (6) TMI 638
Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - service tax return for the period from April 2014 to September 2014 filed late - non-payment of interest or penalty as applicable - HELD THAT:- As per Section 127 of the SVLDRS Scheme, when the declaration made by the petitioner was rejected, meaning thereby he would be liable to pay further interest and penalty on late payment and return. However, to levy any such liability under Section 127 of the SVLDRS Scheme, under Section 127(3), it mandates that after the issue of estimate under Section 127(2), the designated committee shall give opportunity of being heard to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant. Considering the benevolent scheme which has been set into motion by the respondents, the petitioner was required to be heard even otherwise under the statutory mandate - the Form SVLDRS-1 was rejected by the designated committee which is embodied in the remarks column is set-aside. The cases are remanded back to the designated committee with a direction to give an opportunity of hearing to the petitioner by adhering to the rules of natural justice. Petition allowed by way of remand.
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2021 (6) TMI 632
Benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner had not filed returns during the relevant period - Declarations were only voluntary disclosure - obligation to pay full outstanding amount to get benefit of scheme - HELD THAT:- Once it is accepted that the declarations filed by the appellant were factually incorrect in respect of the material particulars furnished therein, the provisions of Section 129(2)(c) of the Finance Act, 2019 would have to be seen as empowering the Department to treat the declarations as never made, and to initiate proceedings for recovery of the tax amounts as per the provisions of the Finance Act, 1994, as amended, governing the levy and collection of Service Tax - The Department, however, has not chosen to deny the petitioner the benefit of the scheme, but has merely suggested a category change in respect of the declarations filed by the appellant. While the appellant had declared that the particulars of outstanding tax were based on returns filed without payment of the tax, the Department treated the declarations as voluntary disclosures . The effect of this category change is that the appellant will be entitled only to the benefits of waiver of interest, penalty, late fees etc. but will be obliged to pay the entire tax amount declared by it in the declarations, by virtue of the provisions of Section 124(1)(e) of the Finance Act, 2019. The stand of the Department is in fact beneficial to the appellant especially since the Department had the option of treating the petitioner's declarations as 'never made', and thereby denying it the benefits under the scheme and initiating proceedings for recovery of the tax amount, together with penalty and interest in accordance with the statutory provisions. The appellant shall make the payments required under the Scheme within 30 days from the date of receipt of a copy of this judgment, and on the appellant making the said payment, the Department shall proceed to finalize the proceedings and issue the discharge certificate to the petitioner - Appeal disposed off.
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2021 (6) TMI 630
Benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refusal to accept the manual returns filed - HELD THAT:- Sub clause (3) of Rule 7 was incorporated with effect from 1.10.2011. A reading of the aforesaid provision would make it clear that the returns contemplated under Section 70 is required to be filed in the forms specified in Rule 7(1) and from 1.10.2011 onwards it is to be submitted in electronic form. Rule 7(3) is explicit that the half-yearly return shall be submitted electronically. No other method of submitting the half-yearly return is contemplated after 1.10.2011, as the wording used in the rule gives the requirement a mandatory colour. The word 'shall' used in the provision is reflective of the said intention of the rule making authority. The requirement of electronic filing is further evidenced by the provisions of the SVLDR Scheme, wherein also, it is specified that the declaration under Section 125 of the Act must be filed electronically. Thus, with the advent of information technology and its advancement, the shift from manual filing to electronic filing serves a salutary purpose and this Court cannot in exercise of its jurisdiction under Article 226 of the Constitution of India interfere with such seamless administration under the taxing statutes - also, the appellant does not have a case that he was prevented on account of any technical glitches, in filing the half-yearly return in the electronic form. Petition dismissed.
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2021 (6) TMI 627
Refund of Service Tax paid - Construction of Services - non leviability of service tax prior to 01.06.2007 and restricting the demand for normal period post 01.06.2007 - principles of natural justice - HELD THAT:- It stands abundantly clear that an amount of ₹ 8,01,765/- is the confirmed liability of the appellant in terms of order dated 16.12.2012. The refund to that extent plus interest of ₹ 55,422/- thereupon is therefore liable to be rejected. Accordingly, it is held that the appellant is not entitled for any refund claim post the sanction of refund of ₹ 30,55,791/-. The order of Commissioner (Appeals) stands modified to the effect that instead of ₹ 5,06,280/- to Government exchequer and attributing ₹ 3,50,907/- to unjust enrichment, the total refund claim of ₹ 8,57,187/- stands rejected - Appeal dismissed.
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2021 (6) TMI 624
Refund of Service Tax paid - Hotel Accommodation Services - Out-of-Pocket Expenses - General Insurance Service - HELD THAT:- The refund in respect of Hotel Accommodation Services is availed only for the benefit of the employees. The same issue has been allowed in favour of the appellants in their own case for the subsequent period - Refund allowed. Out-of-Pocket Expenses - HELD THAT:- There are no sufficient documents showing the details of these expenses or the type of services that have been availed by the appellants - the appellant is not eligible for the refund of service tax paid on out-of-Pocket Expenses as they do not related to any particular service - refund not allowed. General Insurance Services - HELD THAT:- This said issue is covered by decision in the case of M/S. ATC TYRES PVT. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, TIRUNELVELI [ 2021 (3) TMI 681 - CESTAT CHENNAI] where it was held that refund on such issue is allowed - refund allowed. Appeal allowed in part.
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2021 (6) TMI 619
CENVAT Credit - input services - port charges - purchase of goods from high sea seller and some of the invoices for port services etc. were in the name of high sea seller - HELD THAT:- Admittedly the melting scrap purchased by the appellant on high sea sale, is their input for manufacture of M.S. billets. Further Rule 9(1) of Cenvat Credit Rules provides that cenvat credit shall be taken by the manufacturer on the basis of invoice issued by a manufacturer for clearance of inputs from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer. Similarly, an importer is entitled to avail cenvat credit on inputs if the importer is registered in terms of the provisions of Central Excise Rules, 2002 (admittedly appellant is registered with the Central Excise Department as well as the Service Tax Department). There is no dispute as to the aforementioned requirement save and except the invoice not being in the name of the appellant (but in the name of the original importer - high sea seller). It is found that no specific documents have been mentioned considering the transaction of subsequent sale on high sea sale basis, in the Rules. Thus, the scheme of the Act read with the Rules has to be read harmoniously. If for something missing in the rules, the cenvat credit is available under the scheme of the Act, read with Rule 3 read with Rule 2(l) and (k) of the Cenvat Credit Rules, service tax credit cannot be denied for some gap left in the statute. The appellant has rightly taken cenvat credit under dispute - appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (6) TMI 618
Demand for differential duty - assumptions and presumptions under the Chewing Unmanufactured Tobacco Packing Machine (Capacity Determination Collection of Duty) Rules, 2010, read with Section 3A of the Act - HELD THAT:- Under the scheme of CT Rules, 2010 read with Section 3A of the Act, unless the declaration filed by a manufacturer is found to be untrue or false, no demand for additional duty can be raised. In Rule 18(2) of the CT Rules, 2010 - if it is found that goods have been manufactured or cleared from a unit which is not registered or the number of machine or the RSP of the pouches is contrary to the declaration, than the assessee can subject to demand of the duty and levy of penalty. Admittedly, in the facts of the present case, the Department have not found any case of mis-declaration or any other misgiving on the part of the appellant. The whole case of Revenue is made out on the basis of assumptions and presumptions, based on the subsequent machine installed in the month of May, 2010, which is not permissible under the scheme of CT Rules, 2010. Further it is found that the order determining duty liability dated 26.04.2010 has not been appealed, and as such the same is binding on the Department. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (6) TMI 629
Maintainability of appeal - requirement to comply with the pre-deposit of 12.5 per cent of the disputed tax along with the appeal - appellate authority rejected the appeal of the petitioner for want of payment of 12.5 per cent - section 31(1), 31(2) and 31(3)(a) of the A. P. VAT Act - HELD THAT:- Any VAT dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the Act other than an order passed by the Additional Commissioner or Joint Commissioner or Deputy Commissioner, may within 30 days from the date on which the order or proceeding was served on him, appeal to such authority as may be prescribed. It is to be noted here that the word used is any order passed and not order of assessment . Hence, the argument of the learned Government Pleader that appeal itself may not lie cannot be accepted - the endorsement made by the Assistant Commissioner on October 18, 2019 can be challenged in an appeal. In fact, the endorsement itself shows that an appeal lies before the ADC (CT), Tirupati against the said endorsement. Payment of 12.5 per cent. of the difference of tax as assessed by the authority prescribed - HELD THAT:- It is no doubt true that the proviso categorically states that an appeal shall not be admitted by the appellate authority unless the dealer produced proof of payment of tax admitted to be due and proof of payment of 12.5 per cent. of difference of tax assessed by the authority prescribed and the tax admitted by the appellant for the relevant tax period in respect of which appeal is preferred - Here the appeal does not relate to imposing of tax for the relevant tax period or towards any tax liability or penalty imposed, but for a different purpose where no tax is quantified. Therefore, insisting on payment of 12.5 per cent. of difference of tax may not be proper. Division Bench of this court in SRI HARI MAHARALAYAM COMPANY VERSUS COMMERCIAL TAX OFFICER, LALAPETA CIRCLE AND OTHERS [ 2019 (9) TMI 1550 - ANDHRA PRADESH HIGH COURT] , pre-deposit of the part of the disputed tax is required only when the appeal is filed against the assessment order, and since no tax is quantified under the endorsement, insistence of the authority to pay 12.5 per cent. of the disputed tax as a condition precedent for entertaining the appeal would be incorrect and unsustainable. The impugned orders are set aside directing the first respondent-Appellate Deputy Commissioner (CT), Tirupati to entertain the appeals of the petitioners in all the writ petitions against the endorsements of the 2nd respondent-Assistant Commissioner (ST), Vinukonda Circle, dated October 18, 2019 and deal with the appeals without insisting on payment of 12.5 per cent. of tax in accordance with the law - Petition allowed - decided in favor of appellant.
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Indian Laws
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2021 (6) TMI 633
Dishonor of Cheque - liabilities discharged by payment of dues, which was not considered by Court - seeking closure of proceedings as per Section 143 of Negotiable Instruments Act r/w. 258 of Cr.P.C. - HELD THAT:- The Hon'ble Apex Court in M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA [ 2017 (10) TMI 218 - SUPREME COURT] categorically held that where the cheque amount with interest and cost, as assessed by the Court is paid by a specified date, the Court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 of Cr.P.C. Normally, general rule for trial of case under Chapter XVII of the Negotiable Instruments Act is to follow the summery procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary, taking into account of the fact that punishment under Section 357 (3) of Cr.P.C., with sentence of less than one year will not be adequate. In the present case, the option left to the petitioners herein is to approach the Court below and file an appropriate application under Section 143 N.I. Act r/w. 258 of Cr.P.C., raising all the grounds including the ground that they have already paid the entire amount covered under the cheques in dispute - petition disposed off.
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